In the matter of an application [2007] ACTSC 78 (24 August 2007)

Last Updated: 30 September 2008

IN THE MATTER OF AN APPLICATION [2007] ACTSC 78 (24 August 2007)

EX TEMPORE JUDGMENT

ON APPEAL FROM THE MAGISTRATES COURT

No. SC 412 of 2007

Judge: Crispin J
Supreme Court of the ACT
Date: 24 August 2007

IN THE SUPREME COURT OF THE )
) No. SC 412 of 2007
AUSTRALIAN CAPITAL TERRITORY )

IN THE MATTER OF AN APPLICATION

REASONS FOR RULING

Judge: Crispin J
Date: 24 August 2007
Place: Canberra

1. I am required to review orders of the Magistrates Court in sentencing the respondent for 6 offences of failing to lodge income tax returns and 51 offences of failing to lodge Goods and Services Tax returns. The orders, apparently entered on 31 May 2007, were in the following terms:

“(1) Without passing sentence, SHEILA FOLIAKI-SINGH enter a good behaviour order requiring him/her to sign an undertaking that he/she will comply with the good behaviour bond for a period of 18 months and will comply with the following conditions of this order:

° any other condition that the Court considers appropriate such as:

(1) To pay a penalty to the Commonwealth of Australia in the sum of $2500 by 30 June 2008;
(2) Same terms on CC06/40983-7;
(3) Convictions recorded on all matters from CC06/41241-41291 inclusive.

(2) Sheila Foliaki-Singh give security of $1000 for non-compliance with the order”.

2. If I may say so, with respect, this account of his Honour’s orders really seems to be quite confused. Having regard to the notations on the bench sheets that were handed up during the course of argument, it may be understandable that some confusion was generated, but the impression apparently left with the Registrar as to the nature of these orders was clearly inaccurate. The orders actually made by his Honour are recorded in the written reasons for judgment under the heading “Formal Order of the Court” and are in the following terms:

“I record convictions on all 57 charges before the Court. The defendant is released pursuant to Section 20 of the Crimes Act 1914 (Cth) upon a recognizance in the sum of $1000.00 to be of good behaviour for 18 months. Defendant is to pay a penalty to the Commonwealth of Australia on the totality of all charges in the amount of $2,500.00 by 30 June 2008.”

3. The proceedings had been commenced by two separate informations; the first charging the respondent with 6 counts of failing to lodge personal income tax returns for the years ended 30 June 2000 to 30 June 2005 inclusive; and the second charging the respondent with 51 counts of failing to submit Goods and Services Tax returns within the period 1 June 2002 to 30 June 2006 inclusive.
4. In his reasons for judgment, his Honour noted that the facts had been well set out in Exhibits A and B and found it unnecessary to repeat them. For present purposes I will adopt the same approach. His Honour went on to refer to the maximum penalty for each of the offences of failing to lodge a personal income tax return which he said was a fine of $4,400. His Honour also referred to the very substantial maximum aggregate penalty that could theoretically be applied in relation to the 51 offences contained in the second information but noted that the overall GST debt assessed by reference to the 51 GST returns that subsequently had been filed was only $147.
5. His Honour went on to observe that the respondent had no prior record for either criminal or traffic offences and that she had demonstrated sincere “contrition and remorse” for her actions. His Honour said that he had no doubt that she appreciated the gravity of the offences involving public revenue.
6. The respondent is a solicitor and his Honour quite properly observed that offences may be viewed more seriously when committed by a member of the legal profession who is duty bound to uphold the law. However, a number of references had been tendered testifying to the respondent’s good character and to the high regard in which she had been held by her colleagues and friends. There had also been information provided concerning various difficulties that she been experiencing at the relevant times and as to how she had found herself in the predicament that had led to her prosecution.
7. His Honour noted that the respondent had apparently endeavoured to rectify the problem but had been “physically and emotionally overwhelmed” by a situation in which she should have sought advice, guidance, counselling or mentoring from a senior member of the legal profession.
8. The respondent was 48 years of age and a single parent with two teenage daughters. She was of Fijian background and had come to Sydney in 1979. She had been admitted as a solicitor in New South Wales in 1994 and had been employed in Port Stephens and then with a Canberra law firm for two years before becoming a sole practitioner. She seemed to have had poor financial and accounting advice. His Honour clearly found it difficult to understand what he described as the magnitude of the offending between June 2002 and September 2006, since until May 2002 she had apparently been compliant with the laws relating to the GST. She had also been registered as a quarterly taxpayer in that respect. For some unknown reason she had subsequently decided to become registered for monthly returns and, as a consequence, faced 51 charges when if she had remained a quarterly GST registrant she may have faced significantly fewer charges.
9. His Honour then observed that, given the subjective considerations, it seemed appropriate to consider the provisions of section 4K of the Crimes Act 1914 (Cth). In making that observation his Honour presumably had in mind the provisions of subsection (4) of that section which provides that:

“If a person is convicted of 2 or more offences referred to in subsection (3), the Court may impose one penalty in respect of both or all of those offences, but that penalty shall not exceed the sum of the maximum penalties that could be imposed if a separate penalty were imposed in respect of each offence.”

10. Unfortunately, his Honour seems to have overlooked the fact that subsection (3) refers to charges against the same person for any number of offences against the same provision of a law of the Commonwealth that had been joined in the same information. Accordingly, whilst that section had authorised his Honour to impose an overall penalty in relation to all of the offences contained in each of the informations, it had not authorised the imposition of an overall penalty for all of the offences contained in both informations.
11. His Honour quite properly stressed that superior courts have tended to take a more stringent approach to sentencing when offences involve officers of the court and referred to a number of authorities. He also observed that there was a public interest in cases of this type and added that the taxation legislation imposes obligations, burdens, duties and responsibilities on the entire community. He said that, whilst those obligations and burdens may be perceived by some as being onerous and tedious, they are nonetheless legal requirements. He said that it was most regrettable to see a person like the respondent, whom he described as a caring and committed person, in such a position. His Honour said that no two cases were the same and that each sentence had to be determined in the context of the particular factual background in question. Nonetheless deterrence was a primary factor in the present matter.
12. His Honour concluded that the respondent had not deliberately, recklessly or intentionally sought to breach the law or defraud the revenue, and that the offences that she committed had been at the lower end of the scale of gravity. They had been attributable to a number of factors including carelessness and an inability to cope with all of the pressures she then faced. On the other hand the offences were serious, having regard to their number and to the fact that they had been continued over a long period of time.
13. His Honour quite properly observed that the general community is entitled to expect integrity, responsibility, honesty and accountability from someone in the position of a legal practitioner and that the court was required to denounce the failure to comply with such obligations. His Honour then indicated that he intended to apply one penalty as representative of the whole regime of GST matters.
14. Had his Honour proceeded on that basis and separately addressed the offences in each information, he would not have fallen into the first of the two appealable errors alleged by the appellant, the other being that his Honour’s overall approach was unduly lenient.
15. His Honour noted that the GST returns had been lodged shortly after the proceedings were commenced, but dismissed the suggestion that the matter could be dealt with by the application of section 19(b) of the Crimes Act, observing that in his opinion the objective seriousness of the offences simply made that an inappropriate course. If I may say so, with respect, that was obviously correct. He indicated that he intended to record a conviction in each case. He went on to express the opinion that the respondent would not again offend, but said that the offences had involved grave and serious breaches of her personal, public and professional responsibilities.
16. Mr Salmon QC, who appears with Mr Sabharwal for the respondent, has submitted that whilst his Honour did fall into error in purporting to impose an overall penalty for all of the offences contained in both informations, it would nonetheless be appropriate for me to discharge the order nisi made by the Chief Justice on the ground that no substantial miscarriage of justice has occurred. As Mr Salmon pointed out, section 219F(5) of the Magistrates Court Act 1930 provides such a power, and it may be exercised even when grounds for review have been established. Mr Salmon submitted it would be appropriate to invoke that power because, whilst the learned magistrate had fallen into error in the manner previously mentioned, he had clearly regarded an overall fine of $2,500, coupled with a recognizance for a period of 18 months, as an appropriate response to all of the offences charged.
17. Mr Salmon went on to submit that in all of the circumstances outlined by the Magistrate that approach had been entirely defensible. He argued that I should take the view that there had merely been a technical error in failing to effectively apportion the overall fine amongst the two informations.
18. Whilst I have carefully considered Mr Salmon’s submission it seems to me that the nature of the error is simply too fundamental for that to be an appropriate course.
19. In the alternative, Mr Salmon submitted that I should deal with the matter myself, rather than remitting the matter to the Magistrate’s Court to be dealt with again in that jurisdiction.
20. Mr Farmer, who appears for the applicant, did not oppose that course. He did, however, submit that in doing so I should have regard to a number of previous authorities that had been conveniently summarised in written submissions made by the prosecution to the learned magistrate. It is, I think, appropriate that I refer to some of those cases.
21. In Ambrose v Edmonds-Wilson 1988 ATC 4173 Bollen J said that:

“ . . . the object of the section 8C is to compel compliance with things lawfully required of taxpayers pursuant to a taxation law. It is a section intended to promote and facilitate the assessment and collection of the right amount of income tax from taxpayers. The Commissioner must have quite extensive powers to enable him and his officers so to assess and collect.”

22. In the Federal Commissioner of Taxation v Wormald International Australia Pty Ltd [1985] 17 ATR 129 at 132 Yeldam J observed that it would defeat the purpose of taxation legislation if the courts were to condone the neglect of obligations imposed upon taxpayers and possible avoidance of their taxation burdens. His Honour suggested that this factor should be given greater weight when administrative steps had previously been taken to remind the defaulter of his or her obligations.
23. In the subsequent case of Kay v Schouten [2001] TASSC 11 Slicer J observed at [10] that “the persistence of offences, especially where there is ongoing failure to comply with the duty to furnish returns over a long period of time, warrant condign punishment”.
24. His Honour went on to suggest that, whilst there was a need for general deterrence, the need for the imposition of sanctions to cause a particular taxpayer to comply with his or her obligations in the future was, as his Honour put it “of greater import”.
25. Mr Farmer particularly stressed the importance of observations made in two cases. The first was the case of Federal Commissioner of Taxation v Hagidimitriou & Ors [1985] 16 ATR 839. In that case Zelling J suggested that in run-of-the-mill cases, for first offenders a fine in the sum of $240 to $500 might be appropriate and that in the case of second offences a fine in the order of 500 to $1000 might be appropriate; whilst a third and subsequent offences the fine could be expected to be in the order of one to $2000. His Honour added, however, that these figures were not intended to fetter the discretion of the magistrates.
26. The second was the case of McMillan v Bierwirth [1998] ATC 4056 in which Jacobs J said at page 4072 that whilst it is impossible and certainly undesirable to give any hard and fast guidance because no two cases were alike, the sentencing court must consider very seriously the element of general deterrence, which cannot be adequately reflected in statutory penalties. His Honour went on to make the observation that one would not expect to find many cases in which it would be appropriate to impose by way of fine an amount which is less than or no more than the statutory penalties that might have been exacted.
27. Both these cases have been cited in other authorities and I see no reason to doubt the validity of the principles so expressed. Mr Farmer described them as “starting points” for the consideration of sentencing magistrates. I am somewhat reluctant to embrace that phrase, lest it create an impression that a fine will always be the appropriate curial penalty and that the figures so derived should be considered a point from which a magistrate must work up or down. I think it is better for magistrates to simply consider those authorities in the terms in which they are expressed. Nonetheless, the propositions so expounded must be taken into account and given due weight in the ordinary range of cases to which they were directed.
28. In the present case, the learned Magistrate was informed that the respondent had not been in a secure financial position and that, during the period in which the offences occurred, she had been in receipt of Centrelink payments to ensure a minimum level of sustenance for her two daughters, for whom she was the sole carer. In oral submissions, it was also put to the learned Magistrate that she had been in contact with the Australian Taxation Office and had informed that Office of her dire financial circumstances.
29. It is also appropriate to take into account, that in relation to the GST offences, no tax was found payable in respect of the transactions subsequently listed in some of the reports, only a small amount was payable in respect of those listed in others and the respondent was actually entitled to a refund in respect of some reports. As I have mentioned, the overall debt arising from the transactions disclosed in all 51 returns was only $147. Mr Farmer quite properly stressed the fact that a taxpayer is not relieved of an obligation to comply with relevant statutory obligations merely because he or she does not, in fact, have an obligation to pay money. The authorities are obliged to enforce the law and to ensure that the returns are duly provided, irrespective of what they disclose. Nonetheless, it seems to me that this is a relevant circumstance. It is also appropriate for me to take into account the various matters referred to by the Magistrate in his judgment, including the evidence of the respondent’s good character, financial plight and subsequent remorse.
30. Whilst I accept for present purposes that the learned Magistrate’s discretion has miscarried and the matter must be approached afresh, I have come to much the same conclusion by the application of the principle of totality. Nonetheless, that does not mean that it had been appropriate for the matter to have been approached as it was.
31. I take into account the authorities to which I have already referred, and the principles which they emphasise. It should be observed, however, that in this case, the learned Magistrate did not merely impose a fine. He also required the respondent to enter into a recognizance. That is a significant matter, especially for a person who is an officer of the Court, and it is a matter that cannot, of course, be imposed by departmental officers under the rubric of statutory penalties.
32. I order that the sentencing orders of the learned Magistrate be set aside. In lieu thereof, I order that in respect of the first information, containing 6 counts of failing to lodge a personal Income Tax return, the respondent be fined a total sum of $1,500. That sum, I might mention, has been calculated on the basis of $250 per offence.
33. In respect of the second information, that is the indictment containing 51 counts of failing to lodge GST returns, I order that the respondent be fined a total sum of $1,000 and required to enter into a recognizance herself in the sum of $1,000 to be of good behaviour for a period of 18 months.

Nothing further, ladies and gentlemen?

MR SALMON:  Sir, under section 209(8), the court is required to order the costs of the appeal be paid by the appellant. I ask that your Honour make that order.

HIS HONOUR:  I don’t imagine you’re going to resist that, Mr Farmer?

MR FARMER:  No. It is one that I will just bear in mind perhaps for future appearances in Canberra, your Honour. Your Honour, just for clarification - - -

HIS HONOUR:  What is it? Section 209(8)?

MR SALMON:  219F, actually.

MR FARMER:  It’s highlighted in my friend’s papers.

MR SALMON:  Not surprisingly.

HIS HONOUR:  Yes, Mr Farmer.

MR FARMER:  Your Honour, just in relation to the GST ones, your Honour imposed a fine of $1000?

HIS HONOUR:  Yes.

MR FARMER:  And, in addition to that, a section 20 recognizance?

HIS HONOUR:  Yes, that’s right.

MR FARMER:  Was that acknowledging herself in the sum of $1000?

HIS HONOUR:  Acknowledge herself in the sum of $1000, yes.

MR SALMON:  Would your Honour permit time to pay in each case? The magistrate allowed until 30 June 2008?

HIS HONOUR:  All right. I allow until 30 June 2008 for payment of the fines to which I have referred, and pursuant to section 219F(8), I order that the respondent’s costs and incidental for the appeal be paid by the appellant. Thank you, ladies and gentlemen, we’re adjourned.

I certify that the preceding thirty-three (33) numbered paragraphs are a true copy of the Reasons for Judgment herein of his Honour, Justice Crispin.

Associate:

Date: 25 September 2007

Counsel for the applicant: Mr G A Farmer
Solicitor for the applicant: Commonwealth Director of Public Prosecutions
Counsel for the respondent: Mr B Salmon QC with Mr J Sabharwal
Date of hearing: 24 August 2007
Date of judgment: 24 August 2007